Ticking off one’s best customers every few months isn’t a flawless corporate strategy. It tends to incite strong feelings, at best, and massive class-action lawsuits, at worst. Epson seems to have finally realized as much.
After decades of selling cheap printers that require a steady stream of expensive ink cartridges, the company is smashing its business model to bits. In September the Tokyo-based tech giant will offer a new line of consumer printers in the U.S., each with enough ink to print at least 4,000 documents. When the well finally runs dry, customers will be able to refill it with a bottle, just like a baby.
The machines even have a trendy name: EcoTank.1
“It’s a really big advantage to the end user,” says John Lang, Epson’s chief executive officer for North America. “That anxiety and that fear of running out of ink—it’s amazing to me that that was so prevalent.”
“Anxiety” is a diplomatic way to put it; a lot of Epson owners (including myself) would describe the feeling more colorfully. At the moment, Espon’s home and small-business models come with enough ink to rip off only 220 or so documents. What’s more, they don’t work well with third-party cartridges, and the whole range of colors needs replacing when one runs dry—so much cyan, magenta, and yellow going to waste.
The so-called razor-and-blades model, in which a relatively cheap product needs a supply of additional products or services to keep working, has some huge advantages. The low initial price for the unit does a nice job of hooking consumers,2 and the model provides a consistent and predictable stream of profit. The only real problem: It drives customers nuts.
“At the time of purchase, people tend to discount future costs associated with the product,” explains Alexander Chernev, a marketing professor at Northwestern University’s Kellogg School of Management. “There may be a few that feel tricked.”
In Internet forums, printer manufacturers draw a level of ire typically reserved for cable companies and airlines. Not surprisingly, hacking ink-cartridge technology has become a kind of cottage industry of its own, with online message boards crammed with tips and sites such as Amazon.com stocked with after-market kits for “continuous ink supply” systems.
For years, Epson grappled with a number of large class actions from customers who noticed their cartridges still had ink in them when the printer demanded they be replaced. Epson argued that the reserve was needed to make a smooth transition, but in 2006 it settled the grievances, awarding customers a $45 credit per printer.
Now Epson plans to make its money on the front end. The cheapest of its five new printers starts at about $379, compared with the $60 required to get Epson’s current no-frills model. And the company’s hoping to benefit from being the first mover on this front. Lang believes that in a few years, one-quarter of printer revenue will be flowing into giant inkwell models, although it will continue to offer machines that take cartridges as well.
My household rips off 270 documents about every three months. And though we print only black-and-white documents—boarding passes, work files, the occasional recipe—we’re on the hook for all five cartridges every time. That’s about $60 a quarter, a decidedly uncool $240 a year. With the new Espon, I would be buying a single $13 bottle of refill ink every three-and-a-half or four years. So even with a hefty upfront price tag, the machine will be a no-brainer. And the company, it seems, will be printing less money from the Stock household.
Randal Picker, a law professor at the University of Chicago who has written about the history of razor-and-blades pricing, says it’s harder than ever for companies to mask fees as people grow accustomed to spotting sneaky charges from airlines and cell service providers.
“Part of this is obviously the idea that there is some group of consumers out there that are actually getting sophisticated about this,” he says. “They’re getting better at doing the math.”
Lang, the Epson chief, says the company didn’t offer inkwell units sooner because it was afraid people would balk at the higher initial price. There’s likely more to it than that.
Epson has been selling similar versions for years in Asia and South America, territories where ink pirates are particularly aggressive. If a household in Indonesia can get a cheap printer and feed it with cheap, third-party cartridges, the entire razor-and-blades model falls apart. In such a scenario, a manufacturer would rather make a smaller, one-time profit than to keep grasping for a subscription model that never materializes.
Another issue for Epson: It’s never been easier not to print something. At work, when I proofread a draft on paper, some of my co-workers literally mock my red-pen ways. My dated iPhone can handle a boarding pass just fine. A paper recipe? Am I a grandmother in the 1930s?
If I got really strapped for spare change or exceedingly ticked at Epson, I’d simply stop printing. It turns out, a lot of people are making that choice. Epson says the number of people printing documents is waning.3
In short, Epson executives haven’t suddenly scrapped cartridges in favor of giant inkwells because it’s consumer friendly or even because it’s environmentally friendly (although it is both of those). They did it because they need you to keep printing stuff. With the meter starting at 4,000 pages, you just might.
Correction: An earlier version of this story misidentified Alexander Chernev as Anton Chernev